Private market deals will get bigger – Ares co-head of European credit

In the latest edition of Credit Exchange podcast, Mike Dennis, co-head of European credit at Ares Management, speaks with Creditflux's managing editor Lisa Lee about Ares’s record-setting private credit fundraise for direct lending and opportunities to invest in Europe.

Investors are still excited about the opportunity set in Europe, evidenced by Ares’s EUR 30bn direct lending fund which attracted a historic EUR 17bn of equity commitment that far surpassed the previous record also set by Ares. Private credit gives good yield, low volatility and good quarterly distribution on a quarterly basis, said Dennis.

Dennis sees the private credit market easily able to provide EUR 2bn to EUR 3bn unitranche loans in Europe, which could increase if borrower tap multi-currencies across Europe and US. In the future, these deals will get even bigger. But they will done more on an opportunistic basis when public markets are shuttered – Ares core direct lending strategy is focusing on middle-market companies where the banks are continuing to retrench and there are enough deals to be very selective.

Opportunistic credit business is also an attractive space. Ares looks to provide capital to delever balance sheets or provide growth capital for deals that were inked when interest rates were zero and therefore have capital structures that may no longer make sense.